investment

by David Booth, Executive Chairman and Founder, Dimensional Fund Advisors

By now, you’ve probably seen a few – or a few thousand – retrospectives on the past year and the past 10 years… with a few 20-year reflections thrown in.

Maybe it’s the nice, round New Year number. (Although technically, it may not be the dawn of a new decade until 2021.)

Urban legends, urban myths and the latest that’s on everyone’s lips — fake news, whatever you call it, in our age of information, claims of spurious repute can go viral in minutes. Anyone with a PC can start a blog and offer up opinions on just about any subject, whether he or she is an authority or not. Sources? Who needs sources?

The year 2019 served up many examples of the unpredictability of markets.

What a year it’s been. Remember December 2018? As The New York Times reported at the time, “Stocks plunged in December [2018], posting their worst monthly loss since the financial crisis and the worst December since 1931 and the Great Depression.”

The first decade of the 21st century, and the second one that's drawing to a close, have reinforced for investors some timeless market lessons: Returns can vary sharply from one period to another. Holding a broadly diversified portfolio can help smooth out the swings. Also, focusing on known drivers of higher expected returns can increase the potential for long-term success.

An Investment policy statement (IPS) is a statement that is a road map for you and your advisor in structuring your investments according to your goals. It spells out your investment goals and objectives, outlines the asset allocation targets, and the specific types of securities to be used with the expected risk/return profile of your portfolio.

We appreciate your following our five-part series on value investing. If you’ve made it this far, your journey is nearly complete.

Kids learn the basics in school – reading, writing and arithmetic, but schools avoid almost any instruction about money. If they do offer a class, it may be an elective in high school, long after habits have been formed.

There’s a misconception in the markets: value stocks have lost their vigor.